Hartford Business Journal

20 Hartford Business Journal • September 30, 2019 • www.HartfordBusiness.com Opinion & Commentary EXPERTS CORNER The KPI craze: Making sense of marketing metrics By Jill Adams A ges ago, John Wanamaker, the founder of Macy's, said: "Half of the money I spend on advertising is wasted. The trouble is I don't know which half." Today, the trouble is we think we do know what's working — but too often that assessment is based on mistaken assumptions and misaligned met- rics. No doubt, there's no short- age of data. But there is also no end to the confu- sion about what it all means. Here's a quick example. Let's say you're paying $1.70 per click to your website. But your goal isn't to get the masses to your site. It's to attract a niche audience to request a quote. So rather than evaluate your tactics on a cost-per-click basis, you need to compare them on a cost-per- conversion basis. That can drive a very different — and ultimately more effective — marketing strategy. So how do you make sense of the Key Performance Indicator (KPI) craze to evaluate if your marketing is working? Let's start by debunking some misconceptions. Misconception 1: KPIs are only determined by your tactic. Some people assume there is only one KPI for each type of marketing, e.g., social-media posts, digital ads, emails. But your KPIs should be driv- en by your objective, not your tactic. Let's say you're creating a video. You can't just ask: What's the KPI for video marketing? That depends on why you're producing that video. Is your primary objective to build preference for your brand? Then you need to get the right people to watch your video. In that case, you should compare your distribution tactics by video completion rate, average view- ing time, and engagement rate (likes, comments and shares). But if your video is meant to drive leads, then your KPIs could be click- through rates, form completions and average time on your website. Misconception 2: If you can't mea- sure it, you shouldn't do it. Many businesses try to zip through the marketing funnel and head straight for conversions. But to bring in more sales, you first need to get on your prospects' radar by building awareness for your relevant, differ- entiated brand. But brand-building isn't as easy to measure as clicks or conversions. So it often gets thrown overboard for more trackable tactics. Of course, there are highly sophisti- cated ways to measure brand health. But if your budget is limited, look for other KPIs for your brand marketing. For example, before and after a campaign, try tracking the or- ganic web searches referencing your brand. More searches for branded terms can be a proxy for more inter- est in your brand. You can also measure social-media sentiment. Scan what people are say- ing about your organization on social channels — and the level of positivity. And you can track media cov- erage — if you're leveraging the tremendous power of PR to boost brand awareness. But don't just measure how many outlets picked up your press release. Focus on quality metrics, like the number of mentions in targeted pubs, whether the story reflected your key messages, and how prominently your brand was featured. Misconception 3: What matters most is what they did last. It's seductively easy to track what your prospects clicked on to get to your website. But it's more important to track the entire customer journey — what else did they see along the way that ultimately made them more likely to take the desired action. So spend some time connecting the dots. Misconception 4: You should use KPIs to find the best tactic. In this media-fragmented world, there's rarely one thing you should do to win customers. You need to optimize the most effective mix of tactics to surround your prospects along their journey. In fact, studies show that harder-to- measure mass-media tactics, particu- larly TV advertising, have a tremen- dous lift on all other activities. For example, in the financial-ser- vices industry, adding TV to your mix can more than double lower-funnel metrics, like customer acquisition. Why? Because prospects won't want to hear from you — unless they've heard of you. Data is definitely power. Just make sure you're using the right KPIs to power the right marketing decisions for your organization. Jill Adams is CEO of Adams & Knight, a branding and marketing agency in Avon. Jill Adams EDITOR'S TAKE Lamont's "earn-as-you- go" incentive strategy bears watching C onnecticut's use of economic incentives to stir job growth has been controversial in recent years. The Hartford Business Journal and other media outlets have written about a number of deals that backfired on the state, costing taxpayers money as com- panies that received state aid — in the form of loans or grants — went out of business or didn't live up to their jobs' or investment promises. However, there are success stories that ought to get attention. For example, HBJ's Sept. 16 issue spotlighted the growth of Italian jet-engine compressor blades maker Pietro Rosa in Farmington. Pietro Rosa was lured to Farmington by the Malloy administration in 2016 with the help of $5 million in state loans. The company has since purchased and expanded the remnants of Farmington's New England Airfoil Products (NEAP) and added more than 100 jobs in the town. The Malloy administration first met Pietro Rosa executives at the Paris Air Show several years ago, when the company was considering a U.S. base in South Carolina. It chose Connecticut instead. Ironically, Pietro Rosa's state-aid package may have never come to fruition under the Lamont administration, which is migrating to a new "earn-as-you-go" incentives strat- egy — where companies must create jobs before receiving assistance. That raises the question: What is the best way to incen- tivize economic development in a high-cost state that has long been deemed unfriendly to business? Personally, I think the Lamont administration's new strategy, which hasn't been fully fleshed out, at least publicly, is the way to go because it lessens the risk to taxpayers. The Malloy administration transformed the state's jobs strategy, aggressively ramping up corporate incentives — to the tune of more than $650 million in loans and grants — to entice companies to retain and add jobs here. Some of that aid was in the form of grant money or forgivable loans that compa- nies benefited from up front, before they created jobs or made certain investments. That required the state to borrow money in order to provide those incentives, which were panned as corporate welfare by some. The Lamont administration's earn-as-you-go system means employers won't reap state incentives until they've created a certain number of jobs, or made a certain level of investment. The administration is also focusing more on tax breaks rather than grants, mitigating the need to borrow money. What's unclear, however, is whether Lamont's incentives strategy will be more effective in retaining and luring companies to Connecticut. For example, would Pietro Rosa be adding jobs in South Carolina right now instead of Connecticut, if it weren't for the Malloy administration's upfront funding? They answer might be yes. This is something the state must track closely, although there was never a clear analysis done to determine if Malloy's incentive strategy was a good or ef- fective use of taxpayer dollars. Overall, I don't think it was, though I understand the use of economic incen- tives is here to stay as long as states compete for jobs and employers. Department of Economic and Community Development Commissioner David Lehman declined to be interviewed for this column, but his spokesman said the agency is still in the early stages of implementing the earn-as-you-go model and doesn't have any concrete numbers/observations to report yet. However, Lehman is working on new legislation related to this for the upcom- ing session, the spokesman said. Of course, the best economic-development program the state could imple- ment would be providing a more competitive business climate in the form of lower taxes, less regulation, lower energy costs, etc. However, we've seen little progress in that regard under the previous and cur- rent administrations. Greg Bordonaro Editor

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